Afternoon wheat commentary: Spring wheat futures continue to lead the what complex
Spring wheat futures continue to dominant price action this week across the wheat complex, firming another twelve to fourteen cents and in the process moving above Wednesday's post-report highs. Over the past three days, Mpls May has gained 25 cents. For now, the influences behind the rally remain the same as mentioned yesterday. Less than expected planted Spring wheat acres this year (and the need to buy acres), dry weather across the northern plains (although there is still plenty of time to get the crop planted), export demand (Spring and white wheat seem to be the only classes of wheat that draws an interest), and maybe even a little fund-type buying (managed money had cut more than half their position as of the end of last week). One class of wheat that has not had a whole lot of positive influences around in HRW, but you would not have known that by looking at today's price action. Maybe we can call today correction day in KC, as price action in both outright futures and the KC/Chicago spread flipped the script of recent trends. Technically, it was important for KC to bounce today as after Tuesday's close the market was on the cusp of making another bad trade (taking out last week's lows). One could look at that statement as maybe being a bit facetious as HRW futures have already lost over one dollar over the past five weeks but settling below last week's lows would be a bad trade, technically. The KC/Chicago spread firmed seven cents today, following three consecutive defensive sessions that saw the spread lose more than 18 cents and move to levels not seen since early October.
It was a relatively quiet news morning, but there were a couple more tenders pop up - and that certainly could not have hurt wheat futures today. The export lineup all of a sudden has become quite active. We already have seen the Saudi's and the GASC purchase wheat this week, and now we have Algeria, Taiwan, Japan, and Tunisia all in over the next day or two. Goldman Roll starts Thursday (moving positions forward, from May to July).
Crop Report Friday morning.
HRW basis bids saw little change on Wednesday. Bids for 11-pro stayed +125/135, the 11½-pro stayed +131/141, the 12-pro remained +137/+147, the 12½-pro remained +137/147, and the 13-pro stayed +140/150. HRW wheat export bids firmed a little for the higher pros on Wed. For April, ORD stayed +122 and the 11-pro remained +127, but the 12-pro firmed three to +146. For May, ORD remained +124, the 11-pro stayed +128, and the 12-pro firmed two to +146. For June/July, ORD stayed +123, the 11-pro firmed two to +130, and the 12-pro remained +145. SRW wheat track bids down to the Gulf saw no changes on Wednesday. April stayed 105/112, May stayed 90/98 and June remained 65/70. HRW wheat track bids down to the Gulf also saw no change. April stayed 143/153, May stayed 144/154, and June remained 145/155.
Export sales will be out in the morning. Keep in mind, last week was a shortened week around the World because of the Easter Holiday schedule. Despite that, we should see sales similar to last week. Wheat sales last week were 331 TMT combined. We know Korea will be on the report. Maybe even Algeria picking up a little White. Other than that, we will probably only see our usual participants. Look for sales tomorrow to be between 250 and 450 TMT.
Russian wheat production for 2021/22 was left at 78.6 MMT, as recent rains across some of the southern regions of the country boosted soil moisture levels to near-average levels in almost all the essential major winter producing areas.
Export business this week:
*** Egypt's GASC bought six cargoes (345 TMT) of Russian and Ukrainian wheat.
*** The Saudi Grain Organization bought 295 TMT of 12.5 pro hard milling wheat at an avg price of $271.05. It was for delivery between May 20 and June 30. In its prior tender in early November, the Saudi's bought 860 TMT.
*** Algeria has thus far bought between 30 and 48 TMT of opt origin wheat in a tender slated to close today. Prices were said to be around $280/mt.
*** April 8 Taiwan flour mills are in for 96,485 mt of US milling wheat.
*** April 8 Japan is in for 90,815 mt of Canadian and US wheat. The total includes 24,620 mt of Canadian red, 31,940 mt of US DNS, 17,615 mt of US HRW, and 16,640 mt of US white wheat.
*** April 8 Tunisia is in for 75 TMT of opt origin wheat.
*** April 15 Ethiopia is in for 30 TMT of milling grade wheat.
*** April 20 Ethiopia is in for another 400 TMT of milling wheat. Offers must be valid for 30 days.